Palestine Development and Investment Ltd. (PADICO …Liberian Business Law of 1976 Annual Report 2013 . 2 2013 ... Yazid A. Mufti Board Member representing Cairo Amman Bank Samir O.

Palestine Development and Investment Ltd. (PADICO HOLDING)

A public shareholding limited liability company registered in the Republic of Liberia under the

Liberian Business Law of 1976

Annual Report 2013

Annual Report 2013 2

Images shown in the report are part of a number of artworks for artists from the Gaza Strip which PADICO HOLDING displays within the Company’s offices, as part of its corporate social responsibility directed towards supporting Palestinian artists in general, and particularly artists in the Gaza Strip due to the difficult circum-stances they live in.

Pages: 4Pages: 6-7Pages: 10Pages: 24Pages: 42Pages: 50Pages: 60

Nabil Abu Ghanima Maha DayyahRaouf AjouriIbrahim Awadi Tahani skeik Mohamad HawajriSalem Awad

20 Years of Investing in Palestine 3

Contents

ABOUT PADICO HOLDING

PADICO HOLDING: Twenty Years of Investing in Palestine

Board of Directors

Governance

Message from the Board of Directors

Executive Management Report

OUR INVESTMENTS

The Palestinian Economy in 2013

Sectors and Investments

Summary of Investments’ Performance

Future Outlook

OUR SOCIAL RESPONSIBILITY

OUR THOUGHT LEADERSHIP

OUR FINANCIAL PERFORMANCE IN 2013

Main Financial Indicators

Summary of Financial Performance

Financial Position for 2013

AUDIT REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

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PADICO HOLDING’s diversified investment strategy provided the opportunity to achieve increasing revenues over the past years despite the difficult situation, which has made the Company a role model for investing in Palestine


About PADICO HOLDING

Overview

Palestine Investment and Development Ltd. (PADICO HOLDING) was founded in 1993 as a limited public shareholding company registered in Liberia. The Company was incepted as an initiative by distinguished Palestinian and other Arab businessmen, for the purpose of building and developing the Palestinian economy through implementing projects in vital sectors.

PADICO HOLDING’s paid-in-capital is 250 million US dollars (USD), and is traded on the Pales-tine Exchange (PEX) since 1997. The Company’s shareholder base has grown from 710 sharehold-ers in 1998 to around 10,000 shareholders in 2013, attracting institutional investors and funds from Palestine, Jordan, the MENA Region, and from well-established international markets in Europe.

Values and Mission

PADICO HOLDING is dedicated to contribute to the development of Palestine and its economy and con-tinues to reaffirm this commitment to the founders, subsidiaries, affiliates, and shareholders. The most essential means by which PADICO HOLDING engages in Palestine is through the implementation of investment projects in vital sectors, leading to job creation, pioneering economic initiatives for the nation, and initiating partnerships between both the public and private sectors. This position has enabled the Company to play a key role in attracting local and international investors to invest in Palestine.

PADICO HOLDING is equally committed to its social and moral obligations to its employees and to local and international communities. The Company adheres to high standards within its corporate value system and embraces strong corporate governance principles that are compliant with global best practices. As a leading national company, PADICO HOLDING abides by an ethical code of conduct throughout all of its profession-al activities, aiming to ensure good citizenship practic-es and dedication to work. Additionally, the Company continuously endeavors to enhance its internal work environment, adopt responsible investment projects, and implement community development initiatives.

Our Strategy

PADICO HOLDING fulfills its mission and vision by managing a diverse portfolio of subsidiary and affiliate companies on which the Company depends for income. Investing in and maintaining companies that operate in a wide range of economic sectors has enabled the Company to thrive and become the leading investment and development company in Palestine.

PADICO HOLDING is unique compared to other Palestinian and international corporate entities for many reasons. It has the resources to invest in large-scale projects that assure sustainability in earnings and cash flows and it is guided by a diverse board of directors with significant experience relevant to the many sectors in which the Company operates. PADICO HOLDING has also employed a shrewd, long-term investment strategy since its establish-ment, premised on diversification and sustainabil-ity that allow it to adapt to the challenging circum-stances in Palestine.

Our Social Responsibility

Since its inception, PADICO HOLDING has evolved in response to resurgent social and developmental needs. This commitment has developed throughout the progression of PADICO HOLDING to reach an advanced methodological and systematic under-standing of corporate social responsibility, which is reflected on its continuous devotion to community programs and initiatives.

PADICO HOLDING utilizes its resources in coop-eration with its partners to create a new strategic context for community work and university educa-tion empowerment with scientific expertise, inno-vation, and creativity. The Company also focuses on optimum values to refine the personality of youth and increase their competitiveness as well as their ethical and national principles.


The Company’s Milestones Since its Inception

With your continuous and unyielding support, we celebrate with you, dear shareholders, twenty years of investing in Palestine. Your trust and hope attributed to draw features of a bright future and a better tomorrow for our nation. Through these achievements, we renew our pledge to remain a primary investment company that leads the private sector in Palestine; and to position all our energy and effort to serve the Palestinian cause in order to build an independent national economy, providing a decent life and work opportunities to our people.

A group of patriotic Palestinian and Arab investors founded PADICO HOLDING with paid-in capital of USD 172 million.PADICO HOLDING founded the Palestine Real Estate Investment Company (PRICO), one of Pal-estine’s largest real estate development companies. PADICO HOLDING founded the Palestine Telecommunications Company (PALTEL), the first tel-ecommunications company in Palestine.PADICO HOLDING founded the Palestine Securities Exchange as a private shareholding company. Its name was later changed to the Palestine Exchange (PEX).PADICO HOLDING founded Palestine Industrial Investment Company (PIIC) in Nablus to invest in large industrial projects.The Palestine Securities Exchange opened for trading on 18 February.PADICO HOLDING was listed on the Palestine Securities Exchange on 5 June.Palestine Mortgage & Housing Corporation was founded, one of the first companies to offer mortgage financing for the housing sector in the region.Palestine Industrial Investment Company (PIIC) founded the Palestine Poultry Company (PPC), one of the largest poultry companies in the country.PADICO HOLDING’s affiliate, PALTEL, launched Jawwal, providing Palestine with its first mobile phone operator.PADICO HOLDING established Palestine Industrial Estate Development and Management Company (PIEDCO Gaza) to manage the first industrial zone in Palestine.PADICO HOLDING distributed dividends to shareholders for the first time.PADICO HOLDING opened the Jacir Palace InterContinental Hotel in Bethlehem.

1993 1994 1995 1995 1995 1997 1997 1997 1997 1998 1999 19992000

PADICO HOLDING: Twenty Years of Investing in Palestine


20092010 2010 2010

1995 2011 2011 2011

20122012

20122013

PADICO HOLDING opened the Al Hambra Palace, the Company’s first investment in Jerusalem.PADICO HOLDING founded NAKHEEL Palestine for Agricultural Investment, which produces Medjool dates. It is one of the largest agricultural companies in the country. The Movenpick Hotel was opened as the first 5 stars hotel in Ramallah.In partnership with a number of Palestinian and regional companies, PADICO HOLDING founded Palestine for Power Generation Plc. and began work on the construction of the first power plant in the West Bank.The Palestinian Recycling Company (TADWEER), a PADICO HOLDING subsidiary, opened the first solid waste management facility in Jenin.Al-Mashtal Tourism Investment Company opened Al-Mashtal Hotel, the first five stars hotel in the Gaza Strip.PADICO HOLDING established Jericho Gate in partnership with PALTEL Group, to execute the largest residential, recreational, and entertainment developmental project in Palestine. PADICO HOLDING issued USD 85 million in corporate bonds, becoming the first company to issue corporate bonds in Palestine.PADICO HOLDING opened the St. George Landmark Hotel in Jerusalem.PADICO HOLDING completed its restructuring, which placed the majority of its investments under three main holding companies – Palestine Real Estate Investment Company (PRICO), Jerusalem Development & Investment Company (JEDICO), and Palestine Industrial Investment Company (PIIC). The Palestine Exchange (PEX) made the initial public offering of its stock. TAICO company which is fully owned by PADICO HOLDING obtained all construction lines for Rabiyat Al Quds Residential Neighborhood.


Board of Directors

Kameel A. Saad EdeenBoard Member representing Al-Masira Investments Co.

Sabih T. MasriBoard Member

Nabil G. SarrafBoard Member

Nidal M. SukhtianVice Chairman

Munib R. MasriChairman

Zahi W. Khouri Board Member


*Resigned from the Board of Directors on 1/1/2014

Jamal S. HouraniBoard Member representing the

Arab Bank

Omar A. Bitar Board Member representing

Palestine Technology Transfer Co.

Samir H. Zraiq*Board Member

Ammar A. AkerBoard Member

Yazid A. MuftiBoard Member representing

Cairo Amman Bank

Samir O. Hulileh Chief Executive Officer

Ziad M. Turk Secretary General


PADICO HOLDING believes governance is an integral part of the administrative principles overseeing the Company’s operations, as it is a strategic necessity to ensure the progression of the company in the right direction


PADICO HOLDING considers corporate governance as an integral part and a strategic necessity; as the Company adheres to a system of governance that guides all it is affairs, including the structure, future prospects, optimal utiliza-tion of resources, distribution of functions and authorities among the Board of Directors and the executive management. Corporate governance is also a fun-damental principle which ensures the Company’s commitment to international standards including safe work environment, regulated by a code of conduct, and to organize the relationship with shareholders and the community. This practice has improved the efficiency and effectiveness of the system that the Company operates within.

PADICO HOLDING’s commitment to the standards of good governance is not only affirmed by signing the Code of Corporate Governance in Palestine, but also by being the first Palestinian company to join the United Nations Global Compact (UNGC) which reflects its assurance of maximum transparency. The Company provides annual progress reports to the UNGC to guarantee abiding by international standards, as in 2013 the third annual report was submitted.

PADICO HOLDING issues quarterly and annually financial disclosures and press releases stating the Company’s recent developments such as it’s corpo-rate social responsibility and sustainability programs, as well as its commit-ment towards the environment. Furthermore, the Company publishes quarterly newsletter to shed light on its latest updates, activities, and investment plans. The Company also presents annual reports in accordance with all the require-ments set by the Palestine Capital Market Authority (PCMA) and the Palestine Exchange (PEX).

In 2013, PADICO HOLDING completed with the International Finance Corpo-ration (IFC), the investment arm of the World Bank Group, conducting a com-prehensive review of PADICO HOLDING’s governance structure and transpar-ency and will provide recommendations for improvements based on the results of the study. This came as part of the Company’s commitment to strengthen the standards of international best practices within its structure and to benefit from international expertise in the areas of governance.

Governance


Role of the Board of Directors, its Committees and Procedures

The Board of Directors at PADICO HOLDING is composed of eleven members who are charged with over-sight of the Company’s strategic direction, future outlook, and budget. They supervise all financial and investment decisions and all related policies and procedures, making decisions through majority vote. The Board executes its functions through various committees. To ensure transparency, the Board is organized into separate Executive and Audit Committees, in addition to several interim committees mandated to perform certain tasks at specific times. Board members are required to hold a minimum of 100,000 shares of the Company’s stock. Neither the Chairman nor the other board members hold executive management positions within the Company or any of its affiliates, in accordance with best governance practices. The Board of Direc-tors conducted 7 meetings, and 4 days of workshops throughout 2013.

Board of Directors’ Committees

Executive CommitteeOmar Bitar – Head of CommitteeAmmar Aker Jamal HouraniSamir Zraiq * Samir Hulileh - Rapporteur

Audit CommitteeYazid Mufti- Head of Committee Kameel Saad EdeenZiad Turk

Legal AdvisorsFadi Maalouf Zaher Jardaneh Haytham Al-Zubi

External AuditorsErnst &Young

Main BanksArab BankCairo Amman Bank Bank of PalestineAl Quds Bank

Executive Management

Samir Hulileh Chief Executive OfficerAmjad Hassoun Chief Financial OfficerAbdullah Sharawi Manager of Investments and Business Development DepartmentHiba Darwish Manager of Sustainability and Corporate Communications DepartmentJihad Zamari Manager of the Internal Audit DepartmentSamer Safadi Head of Shareholders Management UnitRasha Matwali Head of Human Resources UnitZiad Tafesh Head of Support Services Unit

*Resigned from the Board of Directors on 1/1/2014


Sustainability and Responsible Investments

PADICO HOLDING is dedicated to the principles of sustainability and trans-parency, and pursues responsible investments in the fields of energy and envi-ronment, while remaining committed to the community. PADICO HOLDING’s membership of the United Nations Global Compact (UNGC) has improved the Company’s scope of work in regards to human rights’ standards, labor rights, environmental practices, and the application of business ethics as advocated by the UNGC charter. PADICO HOLDING also seeks to expand the network of Palestinian companies that are members of the UNGC.

Investor Relations and Communication with Shareholders

PADICO HOLDING maintains a proactive relationship with its investors to improve transparency, promote local, regional and international partnerships, and enhance the value of the Company’s shares.

PADICO HOLDING employs various means of communication to connect with investors and shareholders, including telephone calls, the Company’s website, e-mail, the annual report, a quarterly newsletter, the media, and social net-working, as well as the annual meeting of the General Assembly for all share-holders between April and May of each year. This meeting is a forum to discuss the Company’s position, the results of its operations, and its future plans. During the meeting, shareholders approve the statements for the previous financial year, discharge the Board of Directors, elect a new Board of Directors and auditors, and approve any recommendations for the distribution of profits.

Financial Disclosures

PADICO HOLDING discloses its financial statements through its quarterly reports, the annual report, and during the meetings of its General Assembly. Financial data is presented to the Palestine Capital Market Authority (PCMA) and the Palestine Exchange (PEX) pursuant to the regulations in force in Palestine.

Internal Audit

PADICO HOLDING emphasizes the importance of internal auditing, and the Internal Audit Department has full autonomy and reports directly to the audit committee of the Company’s Board of Directors. Consequently, PADICO HOLDING and all its subsidiaries work in accordance with international stand-ards. The Internal Audit Department’s relationship with the companies was determined and approved by a resolution passed by the Board of Directors and based on the Internal Audit Charter.


Shareholders Structure

PADICO HOLDING has 9,040 shareholders as of the end of 2013, distributed as follows:

Name Capital ratio

PALTEL Group 16.31%

Sabih Masri - Group 12.60%

Massar - Group 6.24%

Munib Masri - Group 5.22%

Kingdom Holding - Prince Waleed Bin Talal Group 2.57%

Nidal Sukhtian - Group 2.23%

Sideeq Omar Abu Sido 1.92%

Rasmala Investment Banking Group 1.87%

Ramzi Dalloul - Group 1.75%

Abdel Mohsin Al-Qattan 1.19%

Sheikh Mohamad Al Thani - Group 1.02%

Social Security Corporation 0.96%

Al Said Company Ltd. 0.74%

HANA International Company Ltd. 0.72%

Arab Jordan Investment Bank 0.62%

Adel Said Ibrahim Al Qassem 0.58%

Reyad Tawfiq Al Sadeq 0.56%

Dubai National Investment Company 0.56%

Nabil Sarraf - Group 0.54%

Cairo Amman Bank 0.44%

Ghazi Husseini Jamous 0.40%

Mohamad Zuheir Bin Hamza Fatayerji 0.40%

Arab Bank - Group 0.40%

Hayel Saeed Anam Co. (HSA Group) 0.34%

Mahdi Husni Al-Saifi 0.32%

51%

49%

47%

37%

17%

PalestineIndividuals

Shareholders Distribution by Nationality Shareholders Distribution by Type

JordanCompanies

Rest of the World


Esteemed Shareholders,

We are pleased to present to you the annual report of PADICO HOLDING of 2013, to reflect an overview of the performance and investments of the Company during the last year. We also take this opportunity to review the milestones that took place in 2013, including our remarkable achievements that clearly outnumbered challenges and managed to overcome the various political and economic difficulties and turbulences.

These achievements would not have been possible without your invalu-able trust, support and faith in PADICO HOLDING’s diversified investment targets and as a steadfast pillar of the Palestinian economy, which has been a leading force in the investment sector in Palestine for two decades. Our two-decade experience has proven that the investment climate in the country is rewarding and opportunities are in abundance. Thanks to the combination of skilled labor, high literacy rates, appropriate natural and climate factors as well as the historic and religious significance of the Holy Land that attracts international tourism.

As we present this report, we celebrate this lengthy experience of invest-ment, marking the twentieth anniversary of establishing PADICO HOLDING. We also feel proud and honored as we reflect on the perseverance, relentless efforts and the deployment of Palestinian investment capacities in Palestine and abroad, which all came together to found PADICO HOLDING which has become today a major player in the Palestinian economy.

As we embark today on the third decade of the journey of this Company, we tend to look forward to a better future with optimism. We continue to dream of the day when the Palestinian collective dream is realized, witnessing the end of occupation and the establishment of an independent sovereign Pal-estinian state with a powerful economy that delivers social justice and equal opportunities for all Palestinians and where pillars of citizenship, including diversity and human dignity, are respected.

Additionally, due to the wise vision of investment, introduced by the Board of Directors of PADICO HOLDING, and the relentless efforts of the executive management, the Company managed to generate rewarding profits last year. Profits of the Company stood at USD 25.34 million in 2013 with a growth rate

Message from the Board of Directors


of 38.3%, and the total amount of consolidated assets increased from USD 773.75 million at the end of 2012 to USD 808.67 million at the end of 2013 with a growth rate of 4.5%. These outcomes show that the financial results of the Company continue to improve annually and that the next few years bear promising financial prospects.

Esteemed Investors,

This growth in the profits of PADICO HOLDING in 2013 further proves the feasibility of our investment approach, promising of greater profits in the next year as we begin to harvest the returns of new projects and investments, namely Rabiyat Al-Quds, Jericho Gate, The Executive Club and NAKHEEL Palestine.

PADICO HOLDING has sought to expand its investment approaches in various fields, providing an ideal example for the Arab private sector to embark on new projects. To this end, it has initiated and launched Pales-tine Exchange, the first non-governmental financial market owned and run by the private sector in an unprecedented investment in this sector. Today, Palestine Exchange (PEX) enjoys a distinguished presence among Arab and international financial markets, occupying high ranks in terms of achieve-ment compared with other Arab financial markets.

In addition, PADICO HOLDING has maintained various investment partner-ships that played a major role in achieving great financial returns. Palestine Telecommunications Company (PALTEL) is one of the main investments of PADICO HOLDING in the telecommunications sector; the ever-growing successes of PALTEL are a further proof to the strategic vision of PADICO HOLDING, which resulted in establishing the company two decades ago and achieving a major change in the telecommunications sector as it has become one of the most prosperous in Palestine. In addition to achieving one of the highest returns of investment in the region, PALTEL was a turning point as it was the first Palestinian company that ended the dependence of Pales-tinian citizens on telecommunications services provided by Israeli compa-nies. Throughout this period, PALTEL was characterized by highly dynamic nature and ability to introduce the most advanced utilities in telecommu-nications, responding positively to the latest technologies around the world.

Today, PADICO HOLDING owns investment arms that include leading com-panies and projects in the majority of the economic sectors. In real estate sector, PADICO HOLDING owns 75 % of the shares of Palestine Real Estate Investment Company (PRICO), the investment arm of PADICO HOLDING in this sector. As for tourism, the Company also owns five-star hotels in Bethle-hem, Gaza, Ramallah, and Jerusalem, and is currently working on establish-ing Jericho Gate as an entertainment touristic project in the city of Jericho.

In addition, the Company intends to inaugurate the Executive Club in Ramallah soon. PADICO HOLDING has invested in the industrial sector through Palestine Industrial Investment Company, which encompasses numerous companies including Palestine Poultry Company, Palestine Plastic


Industries Company and other food factories. As for agriculture sector, PADICO HOLDING established NAKHEEL Palestine Company to produce and manufacture Medjool dates, and it owns today the largest farms of palm trees in Palestine and exports to different international markets.

Jerusalem has always been present in our agenda, as PADICO HOLDING has sought to secure a foothold and leave a remarkable impact in the holy city. The Company launched real estate projects of Rabiyet Al-Quds in Bait Safafa, St George Hotel and Al Hambra Palace.

The projects implemented and excuted by PADICO HOLDING have always been a central pillar of Palestinian economy, given the large number of job opportunities they provided and their large contribution to the Palestinian Gross (GDP).

Ladies and Gentlemen,

Considering itself part and parcel of the Palestinian society, PADICO HOLDING has sought to support different social segments, and fulfill its national, moral and social commitments towards the Palestinian society. To this end, PADICO HOLDING has supported the education sector either directly through its support to educational institutes, schools and education funds, or through its annual commitment to provide university scholarships to several Palestinian universities. Furthermore, it has sought to bridge the gap between the outcomes of the Palestinian educational system and the labor market, which resulted in launching different initiatives with the aim of overcoming these problems in cooperation with several Palestinian and international institutions that work in this field.

PADICO HOLDING has remained loyal to its shareholders, who have given their trust to this Company and found it worthy of their support. Therefore, the Company has been committed for years to distribute the profits among shareholders, as the General Assembly of PADICO HOLDING approved in Mid May of 2013 the distribution of 5% of the capital among shareholders. This step comes in line with the policy of the Company despite the fact that it is preoccupied with the implementation of new projects, costing millions of dollars. However, fulfilling this commitment remains of paramount impor-tance.

Needless to say, these achievements of the Company have not been easy and smooth, and this long path has never been devoid of challenges and diffi-culties. On the contrary, these investments have been the result of our per-severance, tremendous efforts in planning and the consolidation of efforts amid unstable political and economic circumstances, including the intra-Palestinian divisions that continue to disturb our unity. More recently, we have seen a form of rapprochement between Fatah and Hamas, which made us more optimistic and hopeful about the national reconciliation that would turn the page of division once and for all. We believe that the Palestini-an unity indeed serves our Palestinian interests in this critical particular phase, which will enable us to unite as Palestinians and face the grave chal-


lenges that lay ahead, threatening our just cause and future especially in light of the turbulent political changes that are sweeping the Arab world in particular. We also hope that the international efforts will bear fruit and achieve a peaceful resolution and a just peace, safeguarding the legitimate rights of the Palestinian people.

Esteemed Shareholders,

In the next phase, the strategy of PADICO HOLDING will focus primarily on attracting Arab and foreign capital to Palestine. To this end, the Company is currently working on conducting an investment conference to showcase the investment opportunities accessible to Arab and foreign businessmen, in an attempt to revitalize the investment sector, strengthen the Palestinian economy and provide job opportunities to combat the growing unemploy-ment rates.

As we celebrate the twentieth anniversary of PADICO HOLDING, we feel obliged to renew our deep appreciation of the tremendous efforts of the founders of PADICO HOLDING, who worked relentlessly at home and abroad to create this landmark investment. It was a dream in the past, and today it has become a remarkable success story. We also commend the sincere efforts of the successive executive managements and all cadres who worked as one team to achieve the prosperity and growth of the Company.

Lastly, please allow me to thank you for your profound trust and continuous support in irder to reach sustainable development, capable of bolstering the Palestinian economy and transforming it into an independent economy that corresponds to the needs of an independent Palestinian state. We will always remain true to our slogan, which embodies a commitment to invest in Palestine and remain the pioneers in the private Palestinian sector towards construction and development.

Yours respectfully,Munib Rashid Al Masri

Chairman


Executive Management Report

Dear Shareholders,

The executive management is pleased to review with you our annual report of 2013, which sheds the light on the Company’s performance and outcomes, the most remarkable achievements as well as the important progresses and developments in the projects, plans and future strategies. In addition, the report illustrates political and economic factors that govern the Company as part of the investment sector. As we embark on the third decade of PADICO HOLDING, we celebrate the achievements of two decades, full of relent-less efforts, unparalleled perseverance, defiance of challenges and achieve-ments that shaped this unique investment experience. We reflect today on this past, rich with experiences and lessons, to reach a better state in the present time and plan for a more brightening future that we are willing to embrace with ambition, hope, the desire to overcome challenges and achieve further prosperity.

The Strategic Approach of the Company

Since its establishment in 1993, PADICO HOLDING has followed a unique investment approach, taking into consideration the special circumstances of the Palestinian economic context and all that it bears of investment oppor-tunities. Over the span of two decades, the Company has demonstrated great dynamism in dealing with the political circumstances and changes in Pal-estine, proving that investment in Palestine is a rewarding experience, and that the performance of the Company has been highly consistent with its strategy since its inception in spite of the continued occupation.

As the Chairman pointed out in his letter, the vision of the founders of PADICO HOLDING was geared towards investment in vital economic sectors that aim primarily at supporting and bolstering the Palestinian economy. This vision has translated into launching mega projects that achieve adequate returns on investment and provide thousands of job opportunities. In its early beginnings, PADICO HOLDING launched distinguished projects in different sectors all over Palestine, including Palestine Telecommunica-tions Company (PALTEL), Palestine Exchange (PEX), Palestine Real Estate Investment Company ( PRICO), Palestine Industrial Investment Company, Gaza Electricity Station, Five star hotels and the Industrial zone in the Gaza Strip. Thanks to the wisdom of the Board of Directors, PADICO HOLDING has managed to overcome the difficult political and economic circumstances that took place in the region. Against the backdrop of these circumstances, the Board of Directors has decided to re-structure the investments of the company and integrate them into three specialized holding companies. In


addition, PADICO HOLDING is working to strengthen the internal structure of these three companies, placing a great emphasis on the administration, financial administration and marketing fields. This important decision of the Board had a clear impact on the financial performance of the Company, as the policy of limiting administrative expenditures, approved by the Board of PADICO HOLDING, started paying off in 2013.

In addition, PADICO HOLDING completed a great part in the implemen-tation of its new projects, especially “Jericho Gate for Real Estate Invest-ment”, “NAKHEEL Palestine”, “Rabiyet Al-Quds”, and “The Executive Club”. Responding to a strategic and urgent need, these projects primar-ily seek to create a balance in the Company’s sources of income, given that the most prominent source of PADICO HOLDING’s income is currently generated from PALTEL. This state is not consistent with rules of risk and income distribution. Therefore, the Company has begun implementing these projects in order to reach a more balanced state in terms of the sources of income, and they are expected to generate adequate and satisfactory revenues in the upcoming period.

Overview of the Company’s Performance and Key Influential Circumstances in 2013

In light of the political turbulences and regional changes that took place in our region, the year 2013 was an eventful one to say the least. These events have surely had their repercussions on the Palestinian political and economic reality, as the economic situation became more complicated in the Gaza Strip due to the closure of borders, destruction of tunnels with Egypt and continuation of blockade. In addition, the financial crisis that the Pal-estinian Authority suffers from continues to affect the overall situation.

Against the backdrop of these complicated circumstances, intensive interna-tional efforts and several rounds of negotiations took place, with the stated aim of reaching a peaceful resolution to pending issues in a manner that safeguards the political rights of the Palestinian people, creates a state of stability and continuity for the Palestinian economy and investment sector and puts an end to the continuous Israeli violations and transgressions.

Despite these unfavorable conditions, the financial performance of PADICO HOLDING in 2013 was excellent and promises increased growth in the upcoming phase. The company achieved a considerable growth in its profits in 2013, as the consolidated net profit stood at USD 25.34 million compared to USD 18.32 million in the previous year of 2012, with a growth rate of 38.3 %. This growth was the result of the improved financial performance of many projects and companies of PADICO HOLDING in 2013, especially its new projects and subsidiaries whose operating revenues contributed to the consolidated income statement with new margins of profits. This growth is also attributed to the policy of limiting expenditures that was approved by the Board of Directors of PADICO HOLDING and adopted by the companies of the group, achieving a tangible difference in the operating and adminis-trative expenditures in 2013.


This growth in the operating profits of PADICO HOLDING was reflected in the performance of shares in the end of 2013, reaching USD 1.35 with a growth rate of 50% in 2013 as opposed to USD 0.90 in 2012. Inves-tors, both as individuals and institutions, were increasingly attracted to this share especially in the fourth quarter of 2013 following the divulgence of the financial statements of the third quarter. Relatively remarkable deals involving these shares were sealed, among which the most important was a positive step from the Palestine Telecommunications Company (PALTEL) to buy a considerable share of PADICO HOLDING that formed 16.3% of the total capital of the Company.

In addition, the consolidated revenues of the Company increased by 8.6% from USD 101.81 million in 2012 to USD 110.54 million in 2013. This is attributed to the growth of operating income from subsidiaries at a rate of 7.0 % from USD 61.62 million in 2012 to USD 65.95 million in 2013, which is primarily due to the increase in operating income of Palestine Industrial Investment Company and PADICO Tourism, as well as the new projects that started their operations in 2011 and 2012 and started generating growing operating revenues such as NAKHEEL Palestine Company for Agricultural Investment.

This growth also stems from the increase of PADICO HOLDING’s share of associates’ results of operations, which increased by 9.7% from USD 38.26 million in 2012 to USD 41.9% million in 2013 thanks to the increase of net profits of PALTEL from USD 115.8 million in 2012 to USD 129.5 million in 2013 with a growth rate of 11.8 %. In addition, the profits of the financial assets portfolio also witnessed an increase due to the improved performance of financial markets in 2013, as the profits of financial stocks stood at USD 2.53 million in 2013 as opposed to USD 0.08 million in 2012.

Remarkable Achievements of 2013

In 2013, PADICO HOLDING achieved a remarkable progress in the new projects it is implementing, whether in terms of completing all necessary procedures to begin the implementation or approaching the actual comple-tion of some of these projects. Continuously Jericho Gate has completed the detailed structural plan of the project and work is currently underway to enable the site to host a number of activities and events that shall coincide with the inception of the preparations of infrastructure as of the first quarter of 2014.

As for Rabiyet Al-Quds Housing Project, implemented by PADICO HOLDING in the South of Jerusalem and consisting of 22 residential build-ings, the Company completed in 2013 the full architectural plans so that the actual construction starts before the end of 2014.

The year 2013 was also full of achievements for NAKHEEL Palestine Company, as it managed to plan 4500 additional trees in 2013, and the total amount of dates manufactured and sold stood at 550 Tons. The Company also found new markets for its products. The Executive Club, one of the


pioneering projects in Palestine, was also completed. The total investment on the establishment of the club, located in Tal Al-Safa neighborhood in Ramallah on a 2600-square meter land plot, has exceeded USD 7 million, and it is expected to be inaugurated in the second quarter of 2014.

Social Responsibility of the Company

Throughout its professional journey, PADICO HOLDING has always given considerable attention to Developmental and societal programs, incorpo-rating them into its agenda and priorities. In 2013, the Company fulfilled its social responsibilities towards various sectors of the local community, taking the form of either direct support to education, culture and entrepre-neurship or the launch of initiatives in different sectors. PADICO HOLDING also aspired to take a clear strategic path in this field, aiming at achieving a positive impact that not only covers a large number of beneficiaries and target segments, but also lasts for a long time.

Inspired by this vision, the Company launched in 2013 the second phase of “Tamayyaz” program, implemented in cooperation with a number of univer-sities and community organizations. In the second phase, PADICO HOLDING sought to engage the majority of Palestinian universities, as it expanded the program and included 7 universities while the first phase covered three uni-versities only. The program seeks to bridge the gap between the educational outcomes of universities and requirements of labor market. This program translates the great emphasis the company places on investing in the human capital and attempting to realize the dynamic promising potential of the younger generation, tasked with building the Palestinian economy and paving the way for a better future.

Being an integral part of the national Palestinian economy, which it seeks to support in every possible mean, PADICO HOLDING continued to imple-ment “Al Watani Awalan” Initiative through PADICO Tourism Company. The initiative seeks to support the products of Palestinian cooperatives, using them to supply the hotels of the Company with their needs. Today, hotels of PADICO HOLDING receive national Palestinian products in order to support their competitiveness when compared to foreign products.

Our Future Outlook

In 2012, PADICO HOLDING launched a number of vital projects that were expected to generate satisfactory revenues and continued to complete some of these projects in 2013. Therefore, in the upcoming stage, the Company looks forward to maintaining and developing its investments, completing the implementation of some of these projects, and improving the performance and profitability of the current existing projects. As for bolstering the cash flow and reducing debt and administrative expenditures, the company will continue to implement its plan, aiming at limiting and controlling adminis-trative and general expenditures and continuing to reduce the debt of the company in the next few years.


Esteemed Shareholders, The year 2013 was an important one, marking several major achievements of PADICO HOLDING. As we review these achievements with you today, we must express our gratitude for the trust that you have bestowed upon us, which was our primary source of motivation for these achievements. The hope that you instill in us also continues to inspire our determination and perseverance, enabling us to carry on with this path and face all the challenges that lay ahead. We also cannot help but commend the critical role of the founders, the current and former members of the Board and the executive managements, as well as the staff of the company, who, over the span of two decades and since the inception of the Company, worked as one team with a spirit full of hope and determination towards success. After twenty years of investing in Palestine, we renew our commitment to the slogan that the founders of the company once phrased: “Committed to Investing in Palestine”.

Yours sincerely, Samir HulilehCEO


By the end of 2013, the total amount of direct investments of PADICO HOLDING in numerous economic sectors stood at USD 595.4 million in book value


Our Investments

1. The Palestinian Economy in 2013

The performance of Palestinian economy continued to witness a slowdown in 2013, as shown in the actual statements of the first nine months of 2013 compared to the same period in 2012. During this period, the growth of the Gross Domestic Product (GDP) stood at 2.1 %, as the GDP in real terms totaled USD 5,172.5 million in the first nine months of 2013, distributed between the West Bank (approximately USD 3,765 million) and Gaza Strip (USD 1,416 million). The GDP Per capita at constant prices in Palestine stood at USD 1,245 during the same period in 2013, which means it decreased by 0.8 % from the same period in 2012. Furthermore, unemployment rates saw an increase in the third quarter of 2013 and reached 23.7%, while it stood at 20.6 % in the second quarter of 2013 and 24.3 % in the third quarter of 2012, taking into consideration that the unemployment rate of 2012 was 23%.

The prospects of the Palestinian economy in 2014 and beyond highly depend on the outcomes of the ongoing peace talks. In the current context, whereby the outcomes of the peace talks remain unknown, any progress in the political track will help increase the annual average growth rate of the real GDP to reach 6.5% in the next five years. If the current scenario and status quo persist, the growth rate of the GDP is expected to be 2.5% in 2014.

2. Sectors and Investments

Investment Sectors

By the end of 2013, the total amount of direct investments of PADICO HOLDING reached USD 595.4 million in book value, spread over a number of economic sectors. The following figure shows the distribution of these investments according to sectors at the end of 2013.

Financial and Services Sector

Real Estate Sector

Tourism Sector

Infrastructure, Environment and Agriculture Sectors

Industrial Sector

67٪

12٪

9٪

8٪

4٪


The financial and services sector make up 67 % of the total direct investments, mainly through the investment in the Palestine Telecommunications Company (PALTEL). This sector is among the least vulnerable economic sectors, which are least exposed to the influence of economic and political changes.

Investment in real estate ranks second after the financial and services sector. Investments of PADICO HOLDING in this sector stand at 12 % of the total direct investments primarily through the contribution in Palestine Real Estate Investment Company (PRICO).

The tourism sector constitutes 9% of the total investments of the Company, through investing in Jerusalem Development and Investment Company (PADICO Tourism), the investment arm of PADICO HOLDING in the sector at hand.

Industrial, agriculture, infrastructure and environment sectors form 12 % of the total investments of PADICO HOLDING. The Company intends to expand and increase its investments in these sectors, as shown in its plans for the next years.

Classification of Investments for Financial Reporting Purposes

For the purposes of financial reporting, direct investments are divided into three main categories as follows: Subsidiary companies, affiliate companies and other companies.1 The following table highlights the distribution of the direct investment portfolio of PADICO HOLDING, according to its audit clas-sification at the end of 2013:

Distribution of direct investments as per the audit classification:

( Million USD)

Investment in Subsidiary Companies 200.6

Investment in Affiliate Companies 356.5

Other 38.3

Total 595.4

1. A subsidiary is an entity that is controlled by another entity, where an investor controls an in-vestee, when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.An associate is an entity over which the investor has significant influence, where an investor has the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.


Financial and Services Sector

The total amount of PADICO HOLDING’s investments in the financial and services sector reached approximately USD 398.1 million, forming 67% of the total investments of PADICO HOLDING by the end of 2013.

The following is a summary on the key operating compa-nies in the financial and services sector and their most remarkable achievements in 2013.

Palestine Telecommunications Company (PALTEL)The year 2013 was a promising one for the Palestine Telecommunications Company (PALTEL), as its finan-cial outcomes of 2013 show an increase in net profits, reaching JD 91.8 million with a growth rate of 11.8 % compared to JD 82.1 million in 2012. The company also managed to achieve a continuous and stable growth in the number of subscribers, as they reached 3.25 million subscribers by the end of 2013 in all telecommunications services, with a growth rate of 2.7 % compared to the end of 2012.

Furthermore, the company witnessed a growth in the subscriptions of land line services as well, as the number grew from 396 thousand subscribers by the end of 2012 to 403 thousand subscribers by the end of 2013, with a growth rate of 1.7 %. Additionally, in spite of the com-petition from the mobile services in the local market, the number of subscribers in Jawwal increased from 2.58 million in 2012 to 2.63 at the end of 2013, marking an increase of 1.9%. Due to this growth, the company was able to maintain its distinguished status in the tel-ecommunications sector in Palestine. The number of ADSL lines in the data services also increased from 185 thousand lines by the end of 2012 to 213 thousand lines by the end of 2013, with a growth rate of 14.9 % even with the presence of other competitors in the Palestinian market.

PALTEL is the first company, listed in Palestine Exchange, to be registered within the most prominent Arab and international indices. The PALTEL share was featured in the index of “Standard and Poors” for the Union of Arab Stock Exchanges ( P-AFE 40 &S) and Dow Jones Index for excellence, which is affiliated with the Federation of Euro-Asian Stock Exchanges ( 50 Dow Jones – FEAS).

3. Summary of PADICO HOLDING’s Investments Performance in 2013


VTEL Holding VTEL Holding was established in the United Arab Emirates in 2006 with a total capital of USD 377 million. The company provides telecommunication services in the Middle East, Africa, Eastern Europe and Central America. VTEL Holding runs invest-ments in the telecommunications sector in Jordan, Iraq, Georgia, Armenia, Ukraine, Burundi and Barbados.

In 2013, the company established strategic part-nerships with local partners to launch services of the fourth generation, through its partnership with “Newroz Telecommunications”. In addition, the company signed another strategic partnership agreement in Kurdistan, Iraq. This achievement is expected to further diversify the investments of PADICO HOLDING in the local and regional spheres, as it owns 10 % of the shares of VTEL Holding, while the Palestine Telecommunications Company (PALTEL), one of the affiliate companies of PADICO HOLDING, owns 25 % of the stocks of VTEL.

Palestine ExchangeIn 2013, Palestine Exchange launched a Palestin-ian index within the indices of Standard and Poors and Morgan Stanley, a remarkable achievement that rendered the exchange a distinguished status among international investment powers. In addition, after adherence to “Al Buraq”, the Real Time Gross Settlement System affiliated with the Palestinian Monetary Authority, member companies were able to complete their cash settlements. Furthermore, the Exchange has managed to increase the number of listed companies to reach 49 companies, with a market value of USD 3.25 billion by the end of 2013.

In 2013, the Exchange also sought to enhance its own system of governance through a series of leg-islative and legal procedures. Being the first Arab Exchange, owned by the private sector, the unique experience of the Exchange was featured in a study, conducted by Economic Cooperation and Devel-opment Organization “OECD” on the governance

of exchange markets in the Middle East and North Africa region. Palestine Exchange has continued to implement its programs to raise awareness on investment, and provide training programs for the financial and banking sectors. It has also worked on enriching the practices of intra-investors relations among Palestinian companies through the activities of the “Investor relations – Middle East” society, affiliated with Palestine Exchange.

The Exchange also strengthened its connection with relevant regional and international spheres, participating in numerous regional and interna-tional meetings, conferences and activities such as: The annual meeting of the Federation of World Stock Exchanges which took place in Mexico, the Conference of the Federation of Euro-Asian Stock Exchanges, and the annual meeting of the Union of Arab Stock Exchanges which was convened in the Tunisian capital. On the local level, Palestine Exchange also participated in different national task forces, working on joining the International Trade Organization and the National Strategy for Exports.

National Bank The National Bank was the result of a merger between “Rafah Bank for Micro Finance” and The Palestinian Arab Investment Bank with a capital of USD 50 million. In line with its vision to reach an advanced status among the operating banks in Pal-estine, the National Bank aspires to be the national alternative for all Palestinians who seek a powerful financial institution, capable of meeting their dif-ferent financial needs. The National Bank is the largest in the Palestinian banking sector in terms of the number of shareholders, as they exceed 13 thousand shareholders.

Audited financial statements of the Bank for the fiscal year of 2013 reveal that net profits after tax of this period stood at USD 3.6 million compared to USD 2.02 million in the audited statements of 2012, with a growth rate of 78.1 %.


Real Estate Sector

The total amount of PADICO HOLDING’s investments in the real estate sector amounted to USD 70.98 million, constituting 12 % of the Company’s total investments by the end of 2013. These are managed through the contribution in Palestine Real Estate Investment Company(PRICO), PADICO HOLDING’s investment arm in this sector.

Palestine Real Estate Investment Company (PRICO) Established in 1994 in accordance with existing Palestinian laws and regu-lations, the Palestine Real Estate Investment Company (PRICO) is a public limited shareholding company listed in Palestine Exchange. In 2007, PRICO opened a branch in Jerusalem titled “PRICO Jerusalem” as well as in Amman under the name (PRICO Jordan) to invest in real estate projects in the holy lands and Amman – Jordan.

The Company operates in three main fields as follows: real estate development, real estate management and contracting.


1: Real Estate Development Projects

Al-Ghadeer NeighborhoodOccupying an area of 32 dunums, Al-Ghadeer Neighborhood is located on the outskirts of Ramallah and Al Bireh where the villages of Surda, Abu Qash and Jefna all converge; 900 meters away from the main road connecting Ramallah to Birzeit. A new master plan for the region was approved, including the construction of a new main road with a width of 22 meters, located 220 meters away from Al-Ghadeer neighborhood. According to the aforementioned plan, transportation and public services network will be within the reach of Al-Ghadeer residents.

The project consists of 374 residential apartments, spread over 34 buildings as each building consists of 10 apartments and a roof. Two buildings have been designated for commercial and services purposes.

The project was launched in 2011, and is expected to be completed in the second half of 2014 when all con-struction and infrastructure works are expected to end. Internal finishing is currently underway, in order to deliver the first phase of apartments in the third quarter of 2014.

Al-Masayef Project – the Second Phase The project is located in al-Masayef area on one of the high hills in the northern part of city of Ramallah, with a wonderful view that overlooks the beaches of Yafa and the villages to the west of Ramallah. The project consists of three residential buildings, with a total of 39 apartments. It was launched at the end of 2012 and is expected to be completed in the second half of 2014.

PRICO House 2 Project Located one kilometer away from Ramallah’s city center, the project is just across the street from the Ministry of Justice. The area is fast-growing commercial hub, as it is home to the headquarters of major companies as well as the Head Offices of numerous banks including the Arab Bank, Al Quds Bank, Bank of Palestine and a number of five-star hotels.

The project started in September, 2013 and consists of 3 basement floors and 6 regular floors. Basement floors will be used as parking lots and showrooms with an area of 1000 square meters. As for the other six floors, they consist of a couple of commercial floors and 4 floors of offices that target architects, engineers, lawyers, medical doctors and companies of information technology.


Blue Beach Chalets Project As a distinguished project on the beach of Gaza city, this project has a 300-meter outlet on the coasts of the Mediterranean Sea. Situated on the north-western part of Gaza City on the coast adjacent to Al-Mashtal hotel, this project overlooks the fascinating pure waters of the sea.

The project consists of 5 buildings that all share this fascinating view of the sea of Gaza. It contains 164 chalets, spread over 4 buildings. Each chalet has different entertainment services that target families looking for recreation and entertainment in Blue Beach Resort. The finishing works were completed at the end of 2013, while processes of marketing and operations are expected to start in the summer of 2014.

2: Contracting Projects

Presidential Guest PalaceOccupying a 40-dunum area of land, the project is located to the north of Ramallah city near Surda area. This project is implemented in accordance with an agreement, signed between PRICO and PICDAR to construct and do the finishing works of Al-Diyafah Palace. It is expected to be completed in 2014.

3: Operational Projects

Al-Bireh Central Station Work is currently underway to upgrade Al-Birah station to become a central station for cars and public buses, providing all the necessary support services. In this regard, a new commercial building has been rehabilitated in compliance with modern and contemporary standards.

Bethlehem Tourist Bus StationBethlehem Tourist Bus Station was re-organized in cooperation with all stake-holders in Bethlehem. The step aims at providing all the modern and necessary services for tourists in an attempt to found appropriate infrastructure that can meet the needs of international tourism in the city.

Park Plaza Project The project is the first outcome of a distinguished partnership between the private and public sectors in Jordan. Through Al-Marafeq Construction and Operation Company, one of the subsidiaries of PRICO, the company signed a partnership agreement with Greater Amman Municipality (GAM) to develop and operate the project under the concept of BOT, which stipulates building the project and transferring its ownership to GAM after 25 years of operation as of 2010.The project, with a built up area of 50,000 m2, is located near the sixth circle in Suweifieh area in the Jordanian capital, a prosperous commercial hub in the city.

The Company developed and implemented the project, consisting of eleven floors that designated for private car parking lots, a commercial market, offices and headquarters of companies.


Al-Marafeq Construction and Operation Company Established in 2007, Al-Marafeq Construction and Operation Company is a private shareholding company that aims at developing lands, managing projects, investing in parking lots, building and managing shopping centers as well as investing in industrial and residential compounds. PRICO owns 100 % of the company’s capital which stands at JD8.5 million.

The Company has direct investments in the following: 1- Mawaqef Company, which owns and manages

Plaza car parking lots in Sweifieh/Amman, where PRICO’s contribution stands at 45 %.

2- Al Watheer Company, which is a private company established in 2010 in Jordan for general trade. The Company currently owns Blinks Project for consumer electronics retail.

4: Industrial Zones

Jericho Agro-Industrial Park (JAIP)As a result of joint cooperation with the Palestinian National Authority and supported by the Japanese government, Jericho Agro-Industrial Park Develop-ment Company was established in 2012 as the first agro-industrial multi-sectoral company. It offers investment incentives for companies and investors in the agro-industrial sector, as it provides indus-trial space and comprehensive storage solutions, in addition to supporting logistical services, necessary for the work of companies in the city. The Company’s vision is to turn Jericho Agro-Industrial Park into a hub, attracting local and international investments in the agricultural sector in order to promote the products in regional and international markets.

The project is located on a 615-dunum land, and the company finished constructing the bases of indus-trial buildings in 2013. In addition, it completed the construction and preparations of the administrative office with a total area of 1000 m2. Part of these buildings will be designated for the use of the Com-mission of Industrial Parks, the free zone, commer-

cial banks and the Investment One Stop Shop. The administrative building is expected to be inaugurat-ed during the second quarter of 2014.

The Company also completed the construction of the first factory in the area, specialized in herbs extracts. In addition, it signed an agreement to build a solar power plant for Jericho Agro-industrial Park, expected to provide sufficient electricity to cover some of the needs of investors and the public facili-ties within it.

Gaza Industrial ZoneAs the first industrial zone in Palestine, Gaza Industrial Zone is one of the most sophisticated areas on the environmental and developmental levels. It played a major role in solving problems resulting from illegal constructions within resi-dential areas on the one hand, and realizing the possibility of establishing small and medium enterprises, considered the nerve of major indus-tries, on the other hand.

The total area of the industrial zone is 486 dunums, consisting of industrial lands, administrative areas, roads and green spaces. Gaza Industrial Park is located to the east of city, only 4 kilometers away from the Shuhada (Martyrs) Square (known as Pal-estine Square) with a distinguished location near the Mintar crossing.

5: Land Development Projects

Naqoura Land – Nablus The project is located at the village of Naqoura in the suburbs of Nablus city. The company has started selling sorted lands, a total of 69 plots with similar areas and title deeds. These lands, which have a panoramic view of Nablus city, were designed to include four public gardens, four loca-tions for public buildings to serve residents of the project and commercial and residential lands. The project is one of the investments of PRICO in lands development.


Tourism sector

The total amount of PADICO HOLDING’s investments in the tourism sector amounted to USD 54.38 million, forming 9 % of the total investments of the company at the end of 2013. These investments are channeled through Jerusa-lem Development and Investment Company (PADICO Tourism), the investment arm of PADICO HOLDING in the tourism sector.

PADICO Tourism PADICO Tourism is a holding company that manages the investments of PADICO HOLDING in the tourism sector. After restructuring the investments of PADICO HOLDING, PADICO Tourism included the following under its investment port-folio; Palestine Tourism Investment Company, Jerusalem Tourism Investment Company, Al-Mashtal Tourism Investment Company, Arab Hotels Company, and the First Specialized Entertainment Company.

In 2013, the name “PADICO Tourism” was introduced as a new branding identity for the Company, after it had been “Jerusalem Development and Investment”, in order to capture its active role as an investment arm of PADICO HOLDING in the tourism sector.

PADICO Tourism invests in a number of five-star hotels as follows: Intercon-tinental Jacir Palace in Bethlehem, Movenpick in Ramallah, Al-Mashtal Hotel


in Gaza and St. George hotel in Jerusalem. In addition, it manages a number of touristic properties including the Executive Club in Ramallah and Al-Hambra Palace in Jerusalem.

The following is a brief summary on the performance of the investments of PADICO Tourism in 2013:

1: Jerusalem Tourism Investment Company

St George Hotel The year 2013 marked the first anniversary of St George hotel in Jerusalem, as it had been officially inaugurated in 2012. During this year, the hotel saw an increased number of residents, both as groups and individuals.

The hotel also hosted an increasing number of workshops and conferences, conduct-ed by local and foreign organizations. The summer of 2013 also witnessed numerous activities and events in which the residents of the hotel eagerly participated.

2: Palestine Tourism Investment Company

Jacir Palace- Intercontinental BethlehemFollowing its inception in 1994, Palestine Tourism Investment Company worked on building a five-star hotel in the heart of Bethlehem city. The hotel was inaugurated in 2000 under the management of Intercontinental Interna-tional Group. However, due to the political turbulences that followed in the same year and outbreak of the Palestinian uprising, which took place all over the Palestinian territories, the hotel was closed down. In addition, the hotel suffered from many losses that affected its infrastructure as a result of the con-tinuous Israeli attacks.

In 2005, the company was tasked with re-opening the hotel under the same name. Thanks to the commitments of partners, the company succeeded in restructur-ing its capital and debt through amortizing the losses and increasing the capital.

The majority of heads of states and official regional and international delega-tions visiting Palestine prefer to stay at Jacir Palace – Bethlehem Interconti-nental, especially that it is the only five-star hotel in Bethlehem.

In 2013, the hotel hosted a number of high-profile figures such as: EU High Representative for Foreign affairs Catherine Ashton, Jordanian Minister of Foreign affairs Mr. Nasser Judeh, Romanian Minister of foreign affairs, Dutch Prime Minister, President of Sri Lanka and other officials and politicians.

More recently, a number of conferences, activities and workshops were convened in the hotel, including: The first Dutch Palestinian cooperation forum, Sri Lankan Forum, Conference on bolstering integrity and transparency in local governance, conference of courts of first instance and magistrate courts, Pal-estinian fourth conference on environmental education and awareness and a number of other activities.


According to the Palestinian hotel classification rating system, which abides by international standards of rating hotels, Jacir Palace Intercontinental became a five-star hotel in 2013. This rating is a proof of the hotel’s commitment to abide by the highest standards of quality in all disciplines.

3: Al-Mashtal Tourism Investment Company

Al-Mashtal Hotel/Gaza After its establishment in 2000, the company began constructing and develop-ing a five-star hotel on the beach of Gaza city. Due to the complicated security and political situation, the work came to a halt in the period between 2001 and 2004. However, the company managed to open its hotel at last in 2011 under the management of the Spanish company Arc Med.

As a result of the circumstances in the strip as well as the lack of progress in the political and national reconciliation issues, the company had to terminate its operation contract with the Spanish company and started to manage the hotel with a new Palestinian cadre, comprised of an experienced and highly qualified staff.

In the first half of 2013, the hotel was highly active, as it succeeded in hosting the largest number of the delegations, wishing to express solidarity with Gaza, as well as a number of conferences and different events.

During the second half of 2013, the tourism sector, just like other sectors, wit-nessed a significant decline in The Gaza Strip due to the closure of the crossings and the continuation of the blockade imposed on the strip, leading to a shortage of fuel and increasing the price of the available fuel resources. Operating costs of the hotel were increased as a result of these factors. In addition, the resi-dents’ activities were largely affected by the snow storm that hit the region at the end of 2013.

Despite all these challenges, Al-Mashtal hotel tried to keep up with the spirit of the holidays at the end of 2013 in an attempt to reactivate the tourism sector, and overcome the recession that hit the Gaza strip. The hotel is still working in cooperation with a large number of institutions and companies to reinvigorate tourism in the strip.

4: The First Specialized Entertainment Company

Established in 2010, the First Specialized Entertainment Company is working on developing the Executive Club, one of the pioneering projects in Pales-tine. Located in Tal Al-Safa Neighborhood on a 2,600-meter land, the project overlooks the fascinating western hills of Ramallah city. With an investment of USD 7 million, the project targets business men and women, who are expected to become private members of the entity. The club consists of two main restaurants with different themes, an indoor pool, outdoor fields with a fascinating view, support services such as Jacuzzi and Sauna, a multi-ser-vice hall, a spa with a distinguished brand as well as a multi-purpose sports


hall with a special international brand too. The project will be inaugurated in April, 2014.

5: Arab Hotels Company

Movenpick Hotel Movenpick – Ramallah hotel is the main project of Arab Hotels Company, established in 1996. The hotel, which was inaugurated and started oper-ating in 2010. The hotel is located only a few minutes away from one of the most dynamic cities of the west bank in Masyoun Commercial area, where the majority of shopping malls and entertainment centers are located. It also has a fascinating view, overlooking Jerusalem and Ramallah.

In 2013, Movenpick hotel acquired the certificate of International sustaina-ble tourism TM Green Globe, further proving the hotel’s commitment towards the environment and sustainability. In the same year, the hotel also launched an initiative titled “Al-Watani Awalan”, which literally translates into “The National First” with PADICO tourism. This initiative seeks to support products of Palestinian cooperatives by making them the main suppliers of the hotel. A number of the hotel’s employees also acquired various excellence certificates in 2013 to meet the needs of customers, such as “excellent customer service” and “CHS: Certified Hospitality Supervisor”, offered by the Arab Hotel Asso-ciation in cooperation with the Educational Institute of American Hotel and Lodging Association.

Industrial Sector

PADICO HOLDING paid special attention to the industrial sector through Palestine Industrial Investment Company, the investment arm of PADICO HOLDING in this sector. The total investments of PADICO HOLDING in the sector at hand amounted to USD 25.96 million at the end of 2013, constituting 4 % of the total investments of PADICO HOLDING.

Palestine Industrial Investment CompanyThe investment arm of PADICO HOLDING in the industrial sector, the company was established in 1995 in the city of Nablus. The company mainly works on investing in light, medium and heavy industries as well as developing and offering administrative and technical support to local industries. Since its foun-dation, it established two public shareholding companies as follows: Palestine Plastic Industries Company and Palestine Poultry Company “AZIZA”. It also owned a host of influential shares in Golden Wheat Mills Company, National Carton Industries Company and Vegetable Oil Industries Company.

Audited Financial Statements for 2013 reveal that the net profit after tax was JD 4.2 million compared to JD 738 thousands in the audited statements of 2012, with a growth rate of 472 %.


The following is a brief on the investments of Pales-tine Industrial Investment Company:

1: Palestine Poultry Company “AZIZA”

Established by Palestine Industrial Investment Company in 1997, Palestine Poultry Company “AZIZA” became one of the largest projects in live-stock sector in Palestine. The company’s main activ-ities revolve around manufacturing feeds, breeding broiler chicken, producing and selling hatching eggs and founding slaughter house of poultry.

Audited Financial Statements of the company for 2013 show that the net profit in this period after tax stood at JD 3.4 million compared to JD 684 thou-sands according to the audited statements of 2012.

2: Palestine Plastic Industries Company

Established in 1998, Palestine Plastic Industries Company mainly focus on plastic pipes for water distribution networks as well as bottles of juice and water in different sizes and shapes. The products of the company are promoted in the local Palestinian market and exported in part to Jordan. In addition to being an industrial company, the company also estab-lished a commercial department that is tasked with importing all connections and needed equipment for the water networks from some of the major interna-tional companies and promoting them along with the products of the company from the plastic pipes.

3: Vegetable Oil Industries Company One of the oldest Palestinian companies, Vegetable Oils Company was established in 1953. It produces veg-etable ghee from non-hydrogenated palm oil, refined corn oil, soybean oil and sunflower oil. It also produces liquid oils that are in line with international quality standards.

Not only is the company capable of fulfilling the needs of the local Palestinian market, but it also exports its products to Arab countries, where they have gained wide popularity over the years.

The company also manages successful investments in Palestinian companies, especially in the National Pales-tinian Beverages Company “Coca Cola”, as it owns 25 % of its capital.

Final statements of the company for the fiscal year of 2013 show that the net profit after tax for this period stood at JD 4.8 million as opposed to JD 2.6 million in the audited statements of 2012, with a growth rate of 80.8 %.


4: National Carton Industries Company

Established in 1993, the company is the first to acquire a license in the field of carton industries and has the highest market share in the field of cardboard manufacturing in Palestine. It mainly produces carton in different shapes and sizes and sells its products in the local Palestinian market. With a host of dis-tinguished characteristics, the company is able to continuously improve its per-formance and look for new investment opportunities in the packaging industry, which is a dynamic and fast-developing industry.

Audited Financial Statements of the company for 2013 show that the net profit after tax for this period stood at USD 485 thousands compared to USD 104 thousands in the audited statements of 2012 with a growth rate of 340.4 %.

5: Golden Wheat Mills Company

Golden Wheat Mills Company was established in 1995. With its equipment and buildings, which are imported from Switzerland in their entirety, the company is among the most advanced in the Middle East region in terms of equipment and buildings. The production capacity of the company stands at 450 tons per day and it acquired the Palestinian Quality certificate as the first Palestin-ian mills company in 2010. The company also produces flour in all its forms in addition to other products such as semolina and bran.

Audited Financial Statements of the company for 2013 reveal that the net profit after tax amounted to JD 215 thousands compared to JD 455 thousands in 2012 according to the audited statements.

6: Jordanian Vegetable Oils Industries Company

One of the leading and oldest companies in the vegetable oils industry in the Arab world, the Jordanian Vegetable Oils Industries Company was established in 1953 as a public shareholding company with a total capital of JD 500,000. The capital was later increased to reach JD 3 million in 1998 and increased again to stand at JD 4 million. The company produces vegetable ghee 100 % from non-hydrogenated palm oil, refined corn oil, soybean oil and sunflower oil.


Infrastructure, Environment and Agriculture Sectors The total amount of investment of PADICO HOLDING in this sector amounted to USD 45.98 million, constituting 8 % of the total investments at the end of 2013.

The following is a brief on the operating companies in the infrastructure and environment and agriculture sectors, their most remarkable achievements in 2013 and their future plans.

Jericho Gate Real Estate Investment Company With a total capital of JD 35 million, Jericho Gate Real Estate Investment Company was established in 2011 by PADICO HOLDING, Palestine Telecommu-nications Company (PALTEL) and Palestine Real Estate Investment Company (PRICO). The company seeks to implement an unprecedented mega develop-mental tourism project in Palestine, which consists of developing various tourism and entertainment facilities that include establishing residential villas, resorts and hotels, sports city, entertainment and water parks, a commercial compound and other entertainment and tourism facilities.

The proposed project is expected to cater to the needs of the local as well as the international tourism coming to Palestine. In 2013, the company completed the detailed master plan of the project, including roads and other infrastruc-ture works such as water and sewage systems and electricity. In addition, the company prepared a detailed study on the socio-economic impact of the project on the local community in Jericho as well as a branding strategy of the company. At the end of 2013, the company started the infrastructure work for the first phase of the project, including the main entrance and preparing the site to host a series of activities and events in the next year.


NAKHEEL Palestine Company A number of PADICO HOLDING’s subsidiaries launched NAKHEEL Palestine Company in March, 2010 as a private limited shareholding company with a total capital of USD 13 million. The company primarily aims at upgrading the sector of palm trees in Palestine and promoting Palestinian dates in interna-tional markets, especially European markets, given that the Palestinian palm sector is still a nascent one, and the local demand exceeds the supply with a considerable percentage. In addition, Palestinian dates do not own any major shares of the external markets that the company mainly targets. The company started establishing farms of date palm to produce “Medjool” dates, considered the largest in Palestine as they occupy a total area of 3 thousand dunums.

NAKHEEL Palestine managed to score many remarkable achievements in 2013, as it succeeded in planting 4500 additional trees in 2013, increasing the number of planted trees to approximately 24000 trees. The total number of manufactured and sold dates reached 550 tons, including what was produced in the farms of the company as well as the dates brought from other local farmers. The company also opened new markets for its products, as it exported in 2013 Medjool dates for the first time to Norway.

In the first half of 2013, the company also exported dates to the Russian, American and Indonesian markets. Furthermore, it also won two golden stars in the tasting competition, convened in Brussels. NAKHEEL Palestine partici-pated in numerous exhibitions and international conferences, the last of which was the first Palestinian Dutch cooperation forum which was held in Palestine. In addition to owning farms of palm trees, the company also owns a factory to store and package the date, a number of storage refrigerators, as well as the trademarks of Jericho dates and Madeenat Al Qamar dates.

Rabiyet Al-Quds Real Estate Project Consisting of 22 residential buildings, Rabiyet Al-Quds is a real estate project, implemented by PADICO HOLDING in the southern part of Jerusalem city. in 2013, PADICO HOLDING completed the architectural master plans, techni-cal studies, design of buildings, infrastructure, roads, retaining walls as well as other architectural and technical tasks and the plan of launching the project. The company will soon announce offering some residential apartments for sale, as ten residential buildings will be ready for sale in the second quarter of 2014, while the actual construction works will begin before the end of 2014. This real estate project is expected to generate profitability and cash returns in the upcoming period for PADICO HOLDING. Palestine Electricity Company Palestine Electricity Company was established in 1999 with a total paid capital of USD 60 million. The company aimed at establishing electricity generat-ing plants in the territories under the jurisdiction of the National Palestinian Authority and carrying out all necessary processes to produce and generate electricity. It has been listed in Palestine Exchange since March 28, 2004. The company has the exclusive right, granted by the National Palestinian Authority, to produce electricity and energy in Gaza strip and sell it to entities


owned or managed by the Palestinian authority for twenty years as of the date of starting its production processes. Extending this right for two consecutive terms is possible, with each term being five years. The company started its com-mercial operations in 2004.

Palestine Power Generation Company As part of its approach to invest in infrastructure, and namely the energy sector, PADICO HOLDING established Palestine Power Generation Company to produce energy in 2010 in cooperation with a number of Palestinian and regional companies. In accordance with an agreement signed between the company and the Palestinian Energy and Natural Resources Authority, the company will establish the first station to produce electricity in the West Bank.

The production capacity of the company amounts to approximately 200 megawatt and is possible to see an increase to reach 400 megawatt. The project is underpinned by a successful partnership between the private and public sectors, as the station abides by the concept of build, operate and own (BOO).

This is one of the pioneering and strategic projects, as it is the first to generate electricity in the West Bank, marking a new landmark step towards achieving the independence of the Palestinian energy sector. In addition, this will pave the way for the entrance of major industries to the Palestinian market, such as the industries of cement and steel and will also provide competitive prices for energy, lower than the current prices.

The company is currently working on completing the preparations to sign final necessary agreements with the National Palestinian authority. The station is expected to start its operations in 2018, and PADICO HOLDING owns 20 % of the shares of Palestine Power Generation Company.

Future Outlook

In 2013, PADICO HOLDING continued to realize dynamic vibrant projects it had launched in 2012, which are expected to impel profitability. Therefore, in the upcoming phase, the company looks forward to maintaining and further developing these investments as well as improving the performance and prof-itability of existing projects. As for enhancing the liquidity position, reducing debt and administrative expenditures, the company will continue to implement its plan to cut down general and administrative expenditures and continue to reduce the company’s debt in the next few years.


PADICO HOLDING reflects its commitment to the commu-nity through a clear strategy based on the diversification of its social responsibility initiatives including developmental, national and various humanitarian projects; covering the support of education, youth, culture and arts, entrepre-neurship, the economy, and media


PADICO HOLDING’s social responsibility has developed in response to resur-gent community needs through a clear strategy based on the diversification of its social responsibility initiatives including social, developmental, national and various humanitarian projects; covering the support of education, youth, culture and arts, entrepreneurship, the economy, and media.

PADICO HOLDING’s commitment towards the society focuses heavily on sus-tainable development and long term strategies in order to attain tangible impact on many segments of the society. Initiatives to Empower Education and Youth

PADICO HOLDING has pursued a course of action within its social responsi-bility that evolved on education as a top priority, and therefore it has dedi-cated a large part of its interventions towards supporting school and univer-sity education, whether through direct support for educational institutions or scholarships for students. In 2013, the Company granted 30 scholarships for bachelor’s degree students from different Palestinian universities; including Birzeit University, An-Najah National University, Arab American University in Jenin, Al Quds University, and Al Quds Open University. Additionally, PADICO HOLDING makes annual contributions to the President Mahmoud Abbas Schol-arship Fund, which provides scholarships to Palestinian university students in refugee camps in Lebanon. PADICO HOLDING aims, through its contribution for university students, to raise the bench mark of education in Palestine.

Subsequently, as part of PADICO HOLDING’s supported projects relevant to education, the Company sponsored “Net Kitabi” project implemented by Partners for Sustainable Development in collaboration with the Ministry of Education. The program aims to provide a number of schools in the Gaza Strip with Laptops that offer buit-in educational programs as part of the curriculum, to integrate technology and develop students’ personal skills and increase their knowledge.

“Tamayyaz” Program… A Strategic Partnership and Sustainable Entrepreneurship

In 2013, PADICO HOLDING renewed its strategic partnership for “Tamayyaz” program which was launched in 2012, aiming to bridge the gap between Pal-estinian universities, education outcomes and the labor market. The two year program is built on subjecting students to unique experiences and mentorship to equip them with life skills, soft skills and knowledge. “ Tamayyaz” program is also directed towards developing students’ creativity, critical thinking, entrepreneurship, sense of citizenship and belonging, social responsibility and voluntary work .

Our Social Responsibility


In 2013, PADICO HOLDING launched phase 2 of “Tamayyaz” program in part-nership with seven Palestinian universities. Students were selected according to a specific criteria to ensure their readiness to be enrolled in a program which will develop their skills and personality to increase their competitiveness in the job market.

The idea of “Tamayyaz” program was tailored when PADICO HOLDING felt the challenges faced by the Palestinian economy in general, the high unemploy-ment rates and the increasing number of unemployed graduates from universi-ties in specific. The Program was launched after a thorough engagement with the business, civil society and academic sectors locally, regionally, and interna-tionally; which helped PADICO HOLDING pin-out the cumbersome difficulties facing Palestinian university graduates. Based on the iterated, the Company has created a program that provides university graduates with incentives for con-tinuous learning and to enhance their ability to keep up with the latest develop-ments in their field of work, and build up their critical thinking spectrums.

Furthermore, this approach comes with the necessity of partnership and a more proactive cooperation between various sectors; thus, “Tamayyaz” program was created in partnership between PADICO HOLDING, Sharek Youth Forum, and the International Youth Foundation (IYF).

Sponsorship of Economic and Developmental Activities PADICO HOLDING is receptive of any cooperation opportunities, especially long term and sustainable initiatives that of economic and developmental nature that will positively impact the Palestinian society and enhance the current cir-cumstances.

PADICO HOLDING co-sponsored the first Global Entrepreneurship Week (GEW) in Palestine which was held in November 2013 and organized by Pal-estine for a New Beginning (PNB) ; the Company also participated in the “Cel-ebration of Innovation” within the activities of the GEW and was part of the


judging panel. GEW is the world’s largest celebra-tion of the innovators and job creators who launch startups that bring ideas to life, drive economic growth and expand human welfare; GEW is held annually in November.

PADICO HOLDING partook in many initiatives to empower the economy in Palestine, as it is a member in Palestine for a New Beginning (PNB) which is an alliance of public and private sector institutions and individuals that aims to leverage resources and experience by investing in innovative new projects and building on existing successful initiatives.

In addition, the Company is devoted to entities and organization that are directed towards offering vol-untary work, such as, Injaz Palestine which is a non profitable organization that is led by private sector companies, and intends to provide Palestinian students with a series of practical lectures conduct-ed by volunteers from the private sector to qualify them to enter the labor market.

PADICO HOLDING also supported the 5th Yousif A. Sayegh Memorial Development Lecture which is organized by Palestine Economic Policy Research Institute (MAS).

In the context of empowering women economically, PADICO HOLDING sponsored Entrepreneurs Men-torship Program in cooperation with the Business Women Forum to develop women’s skills and knowl-edge to start their businesses.

Communicating with the Media and Supporting Radio Programs

PADICO HOLDING assures to maintain a good relationship with the media and denotes a part of its social responsibility to support radio programs. The company sponsored “Youth Dialogue” program which is broadcasted on Al Qamar Radio in Jericho and discusses issues relevant to the Palestinian youth and their concerns such as unemployment, volun-tary work, immigration, violence, and social media. Continuously, the Company sponsored “Al Rakeeb” economic program which is broadcasted on different radios and tackles the rights of Palestinian citizens

among other economic issues. PADICO HOLDING also sponsored “Women and the Economy” program that talks about women’s role in the economy and showcases successful role models within this front, the program was broadcasted on Niasa’ FM Radio. Furthermore, the Company sponsored many ini-tiatives and programs relevant to developing the economic media in Palestine among a number of lectures and trainings provided by Arab and inter-national experts.

Supporting Arts and Culture

PADICO HOLDING prioritized the Palestinian culture as it is considered an essential element of the Palestinians identity and an important com-ponent to build a nation. Additionally, investing in the people and the cultural scene is as important as implementing strategic investments; thus, the Company has supported many cultural activities such as: “Ambitious Creativity” exhibition organ-ized by the Ministry of Culture that showcased art works for graduates of art schools and academies in Palestine. Consiquently, the Company supported a music concert for Trio Joubran to celebrate their 10 years anniversary. In 2013, PADICO HOLDING started the preparations to hold an exhibition for artists from Gaza which will take place in May 2014.

Humanitarian and National Initiatives

Stemming from PADICO HOLDING’s commitment to support the Palestinian cause and in particu-lar Palestinian refugees, it sponsored the “Elec-tronic Archive” project which is implemented by the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) to document the history of Palestinians in refugee camps in Palestine and the Diaspora .

Moreover, the Company continued throughout 2013 to execute “Al Watani Awalan” project implement-ed by the Jerusalem Development and Investment Company (PADICO Tourism) in partnership with the United Nations Development Programme, which aims at supporting women cooperatives and Pal-estinian agricultural products through the hotels owned by PADICO Tourism.


The Company also sponsored the first mail stamp holding the word “Palestine” after being granted a UN Observer state membership, which has supported improving the Palestinian status among the international community.

Additionally, PADICO HOLDING played a leading role in creating the “Pales-tine Institute for Public Diplomacy” which is a national organization directed towards branding Palestine and enhancing its image worldwide.

In order to increase the cultural exchange, PADICO HOLDING hosted a student delegation from Harvard Kennedy School of Government and Harvard Business School as part of its annual sponsorship for TREK program. The objective is brining possible future leaders and decision makers to Palestine to observe the political and economic realities affecting the country and showcasing the potential it withholds. The Company also sponsored “Future Palestine” con-ference launched by NewPal, a network of young Palestinian professionals and specialists living in Palestine and aboard, who are active in diverse fields and work to create a new perspective on the Palestinian issue via different channels such as enhancing Palestine’s international relations, promoting and support-ing initiatives that empower the younger generation and fostering debate and dialogue within the Palestinian society.

PADICO HOLDING also supported many entities and activities such as: “Al Qamar” Charitable Organization, “I Can Move” project, “Al sham” Theater and Park, “Al Murtaqa” Organization for women, and “Al Mada” Music Therapy Center.


Our Thought Leadership

As part of the global economic system and because it affects and is affected by the political and economic changes in the world, PADICO HOLDING has a strong presence locally and internationally to present its entrepreneurial vision, discuss outstanding issues, challenges, and benefit from the experiences of others. The Company is inspired by the success stories in Palestine and it utilizes them to achieve sustainability and economic growth.

Initiatives and Effective Partnerships to Support Development

PADICO HOLDING leads initiatives that address the challenges afflicting the Palestinian society, especially the high unemployment rates. Thus, the Company launched many projects and initiated partnerships with many Palestinian and international institutions as well as organized workshops on various relevant issues to tackle these issues. Through its thorough review of the status of Palestinian youth and the increas-ing unemployment rate, PADICO HOLDING lauched “Tamayyaz” program to tackle the urgent need to modify the Palestinian educational curriculum in accordance with the rapid developments and necessitated skills within the job market.

To embody the importance of partnerships between the private sector and the Palestinian universities and its role in supporting education, PADICO HOLDING sponsored a study entitled “Innovative University–Industry Part-nerships: Comparative Analysis and Competitive Impact on the Palestinian Private Sector” conducted in cooperation with the Faculty of Commerce and Economics Department of Business Administration at Birzeit University and was presented at a Conference in Amsterdam.

Also, locally, the study was discussed in a workshop held by PADICO HOLDING in partnership with Birzeit University and the British Council under the title of “Assessing Impact of Initiatives Directed Towards Enhanced Competitiveness”; the discussion was facilitated by Dr. George Tovstiga a Professor of Strategy and Innovation Management at Henley Business School. Recommendations of the workshop mainly focused on the need of sustainable development projects, identifying the requirements of the private sector and the importance of its involvement in the preparation of educational materials, academic and univer-sity curricula. “Tamayyaz” program was presented as case study of purpose-ful corporate social responsibility projects directed towards enhancing educa-tional outcomes. Subsequently, a paper about the “Tamayyaz” was published in “Perspectives on global Development and Technology” magazine.


Furthermore, PADICO HOLDING organized a workshop titled “Unemployment Among Jerusalemite Youth” in cooperation with Ougarit Group and Education for Employment Organization; the purpose of the workshop was to tackle the challenges and obstacles faced by the youth in Jerusalem. PADICO HOLDING also partook in the “National Conference to Empower Job Opportunities” which was held in Hebron and organized by Al Quds Open University, the Chamber of Commerce and the Ministry of Labor.

PADICO HOLDING sponsored a workshop titled “Unemployment and Job Creation” to discuss the reasons and possible solutions for the unemployment rates, and to present statistics focusing on youth and university graduates. Also, participants highlighted the lack of competitiveness among university gradu-ates. Additionally, the Company participated in the Career Day held at Sharek Youth Forum in cooperation with the International Youth Foundation.

A Proactive Presence in Local and International Conferences

PADICO HOLDING participated in the World Economic Forum on the Middle East and North Africa titled “Advancing Conditions for Growth and Resilience” which was held with the presence of more than 900 Arab and Regional senior personnel, economic analysts and diplomats in Jordan-Dead Sea between the 24-26 May 2013. The Forum focused on current Middle East and North Africa contexts and the fundamental importance for shaping the economic, social and governance systems of the future; the main political and economic issues were highlighted such as the situation in Syria, the economic crisis in Europe, politi-cal and demographic changes in the Middle East, the high unemployment rate in the Arab World and its effect on the economic situation.

Moreover, PADICO HOLDING participated in a session titled “Democratic Capitalism” as part of Forum 2000 international conference entitled “ Socie-ties in Transition” which is held in Prague, Czech Republic between 15-17 September 2013. More than 130 global leaders from politics, academia, civil society, media, business and religion discussed challenges and threats related to democratic transitions.

The Company was present in the “Third Annual High-Level Anti-Corruption Con-ference for G20 Governments and Business” in Paris between 25-25 April 2013. The conference was jointly organized by the Russian Presidency of the G20 and the OECD, with support from the UN Office on Drugs and Crime (UNODC). The conference brought together high-level government, business and civil society representatives to examine best practices for combating corruption, with a par-ticular focus on promoting transparency and integrity, and cutting-edge measures for governments and business to combat corruption.

Also, PADICO HOLDING partook in the 9th Annual Conference for EFG Hermes in Dubai between 24-28 February 2013. The conference provides a platform for companies to present their success stories to leading key players in the investment community.


The Company facilitated a discussion on economic empowerment for women during the 5th session of “Supporting Women’s Economic Empowerment” con-ference which was held in Amman from 27-29 April 2013. The conference is organized by OXFAM Quebec with the financial support of the Government of Canada, provided through the Canadian International Development Agency (CIDA). The conference aims to work towards creating an enabling environ-ment for women’s sustainable economic development and empowerment. The Company also partook in the 5th annual conference for the Middle East Investor Relations Society (MEIR Society) which was held in Dubai during January 2013. The MEIR Society aims to operate as the main investor relations communications channel in the Middle East to provide support for companies in the region. The society played a key role in enhancing the reputation, effi-ciency and attractiveness of the Middle East capital markets. It is noteworthy that PADICO HOLDING is a member of MEIR Society- Palestine.

Continuously, in order to access and benefit from international experienc-es in the field of social responsibility, PADICO HOLDING participated in an advanced training at Harvard University- USA on development of corporate social responsibility programs and projects to impact various segments of the society. The program shed light on the major challenges facing managers in determining the best strategies for improving and implementing social respon-sibility programs. The program was titled “Evidence to Improve Social Program Effectiveness”. PADICO HOLDING took part in the first Economic Media conference organ-ized by Al Safeer Economic Newspaper in November 2013. The conference discussed ways to improve the quality of economic information published in the Palestinian media, given its role in attracting investors and support-ing the economy by promoting the principles of transparency in Palestinian institutions, and to develop a positive relationship between the private sector and the government.


PADICO HOLDING has achieved a significant rise in profits for the year 2013, as consolidated net profit reached USD 25.34 million, compared to USD 18.32 million for the year 2012, recording an increase of 38.3%


1 - Main Financial Indicators(Amounts in USD million)

Main items of consolidated income statement 2013 2012 Change %

Total revenues 110.54 101.81 8.6

Subsidiaries’ operating income 65.95 61.62 7.0

Share of associates’ results of operation 41.98 38.26 9.7

Profit before income tax 26.12 20.04 30.3

Profit attributable to equity holders of the parent 25.80 19.35 33.3

Net consolidated income 25.34 18.32 38.3

20132012

110،54101،8165،9561،6241،9838،26

Our Financial Performance in 2013

Total revenues Subsidiaries’ operatingincome

Share of associates’ resultsof operation


Main items of consolidated statement of financial position 2013 2012 Change %

Total assets 808.67 773.75 4.5

Loans, bonds and credit facilities 226.12 225.29 0.4

Other liabilities 61.99 52.64 17.8

Non- controlling interests 101.72 97.33 4.5

Equity attributable to equity holders of the parent 418.85 398.49 5.1

Total equity 520.57 495.82 5.0

Main financial indicators 2013 2012 Change %

ROIC 10.34% 7.76% 33.2

ROaE 4.99% 3.74% 33.4

ROaA 3.20% 2.44% 31.1

Debt to equity ratio 43.44% 45.44% (4.4)

Debt to assets ratio 27.96% 29.12% (4.0)

Current ratio 0.62 0.80 (22.5)

BV/ Share (USD) 1.679 1.598 5.0

2- Summary of Financial Performance for 2013

PADICO HOLDING has achieved a remarkable income growth in 2013 as consolidated net profit reached USD 25.34 million compared to USD 18.32 million in 2012, marking a growth of 38.3%. This growth was at-tributed to improvement in the financial performance for many of PADICO HOLDING’s subsidiaries and it’s projects in 2013, especially the new projects of PADICO HOLDING and its subsidiaries in which its operating revenues contributed to the consolidated income statement with new profit margins, in addition to the cut-ting cost policy which was approved from PADICO HOLDING’s Board of Directors and later adopted by the HOLDING’s companies, the results of this policy was significantly reflected to the general and administrative expenses of 2013.

20132012

808،67773،75520،57495،82

Total assets Total equity

(Amounts in USD million)


The growth in the operating profits of PADICO HOLDING was reflected on the perfor-mance of its stock to close at USD 1.35 achieving a growth of 50% in 2013, compared to USD 0.90 in 2012. The stock has seen demand from investors, individuals and institutions, especially during the last quarter of 2013 after the financial statements disclosure for the third quarter, when the Company carried out a number of relatively significant purchases were made on PADICO HOLDING stock, most substantial of which was PALTEL Group’s purchase of a major share of PADICO HOLDING, which strengthened PADICO HOLDING’s stock price and gave further assurance and trust to investors and shareholders while re-flecting positively on the Palestine Exchange (PEX) in general, and PADICO HOLDING Group companies in particular.

Comprehensive income doubled twice and a half in 2013, reaching USD 33.66 million in comparison to USD 9.47 million in 2012. This significant rise in comprehensive income was the consequence of unrealized gains resulted from revaluation of “financial assets at fair value through other comprehensive income”, these gains were a reflection for improved stocks’ prices that PADICO HOLDING and its subsidiaries and associates invested in, dur-ing 2013.

Some of the new projects are still in their establishment phase, thereby incurring start up expenses allocated to the consolidated income statement. These projects include Al Shara-fat residential project in Jerusalem, the Executive Club in Ramallah, Jericho Gate Real Estate Investment Company, and the solid waste recycling project “TADWEER”. This has limited further growth in operating profits in 2013. It is expected, however, that the operat-ing profits of these projects will be reflected significantly on the financial performance of PADICO HOLDING once they start operations.

20132012

25،3418،3225،8019،35

Profit attributable toequity holders of the parent

Profit in 2013


2.1 Consolidated Revenues

Total consolidated revenues registered a growth recording USD 110.54 million for 2013 compared to USD 101.81 million for 2012. This increase can be main-ly attributed to:

» The growth in operating revenues of subsidiaries by 7.0 % from USD 61.62 million for 2012 to USD 65.95 million for 2013. Rising operating revenues of Palestine Industrial Investment company (PIIC) and Jerusalem Devel-opment and Investment Company (PADICO TOURISM) contributed to this growth, along with the new projects that started operations in 2011 and 2012 like NAKHEEL Palestine.

» Total consolidated revenues is PADICO HOLDING’s share of associate com-panies’ results of operations increased by 9.7% from USD 38.26 million in 2012 to USD 41.98 million in 2013. This mainly resulted from the increase in PALTEL Group’s net profit by 11.8% from JD 82.13 million in 2012 to JD 91.83 million in 2013.

» Improved performance of financial markets in 2013 resulted in increas-ing gains from the financial assets portfolio, recording USD 2.53 million for 2013 compared to USD 0.08 million for 2012.

» Gain from sale of investment properties decreased from USD 1.85 million in 2012 to USD 0.08 million in 2013.

Table (1): Sources of revenues

ItemFor the Year Ended 31/12

Change%2013 % 2012 %

Operating revenues 65.95 59.7 61.62 60.5 7.0

PADICO’s share of associates’ results of operation 41.98 38.0 38.26 37.6 9.7

Gain from financial assets portfolio and others 2.53 2.2 0.08 0.1 3063

Gain from sale of investment in properties 0.08 0.1 1.85 1.8 (95.7)

Total consolidated revenues 110.54 100.0 101.81 100.0 8.6

20132012

65،9561،6241،9838،26

Operating revenuesPADICO’s share of associates, results of operation



2.2 Consolidated Expenses

Consolidated operating expenses increased from USD 47.53 million for 2012 to USD 49.51 million for the same period in 2013, thereby increasing by 4.2%. This increase in operating expenses was in conjunction with greater increase in operating revenues with a rate of 7.0 % during the same period, indicating increased efficiency and production capacity for many subsidiaries. Coincid-ing, PADICO HOLDING’s policy to control its administrative costs which was adopted by the Company’s Board of Directors showed its results, reducing Gen-eral and administrative expenses from USD 16.21 million for 2012 to USD 15.85 million for 2013 with a declining rate of 2.2%.

Also, financial costs witnessed a slight increase from USD 10.23 million for 2012 to USD 10.24 million 2013, even though average total debt increased from USD 215.65 million in 2012 to reach USD 225.70 million in 2013.

Increased by 4.0%, depreciation and amortization expenses recorded USD 8.26 million in 2013 compared to USD 7.94 million in 2012. The majority of this increase came due to the fixed assets that were partially depreciated in 2012 in conjunction with its actual outputs, which lead to a limited effect on depreciation expense in 2012 compared to 2013.

Table (2): Expenses

ItemFor the Year Ended 31/12

Change%2013 % 2012 %

Operating expenses 49.51 58.5 47.53 56.8 4.2 G & A expenses 15.85 18.7 16.21 19.4 (2.2)Finance costs 10.24 12.1 10.23 12.2 0.1Depreciation and Amortization 8.26 9.8 7.94 9.5 4.0Income tax expense 0.79 0.9 1.72 2.1 (54.1)

Total expenses 84.65 100.0 83.63 100.0 1.2

3- Financial Position for 2013

3.1 Total Assets

Total assets increased by 4.5% reaching USD 808.67 million by the end of 2013 compared to USD 773.75 million by the end of 2012. Total current assets which include cash and short term deposits, financial investments, accounts receivables, and inventories constituted 9.4% of total assets, while non-current assets which include investment properties, PPE, projects in progress, investment in associates, biological assets, and other long term assets constitute 90.6% of total assets.

Cash and financial investment reached USD 68.27 million by the end of 2013 compared to USD 70.66 million by the end of 2012, registering a decrease of USD 2.39 million by 3.4%. At the same time, loans and receivables decreased by 5.4% to reached USD 45.08 million by the end of 2013 compared to USD 47.67 million by the end of 2012, it should be mentioned that the major part



of the receivables belong to PADICO HOLDING`s subsidiaries. Inventory and ready for sale properties increased by 2.9% from USD 11.45 million by the end of 2012 to USD 11.78 by the end of 2013.

Investment properties witnessed a decrease of 2.8% by the end of 2013, reaching USD 98.08 million compared to USD 100.87 million by the end of 2012. This decline came as a result of transferring “investment properties” to “projects in progress”; in order to establish new projects for the company. This item includes investments of PADICO HOLDING and its subsidiaries in lands and real estate; most importantly those investments owned by PRICO and Jericho Gate. It is worth noting that the value of these investments is shown at historical cost, in accordance to PADICO HOLDING’s adopted accounting policy.

PPE and projects in progress increased by 12.8% to reach USD 191.66 million by the end of 2013, compared to USD 169.84 million by the end of 2012. This is due to an increase in projects in progress by 69.7% from USD 32.66 million by the end of 2012 to USD 55.42 million by the end of 2013, with an increase amounting to USD 22.76 million, representing the additional cash investments injected in these projects, particularly Al Ghadeer Residence project that is being developed by PRICO.

Additionally, investment in associates increased by 5.5%, reaching USD 378.28 million by the end of 2013 compared to USD 358.44 million by the end of 2012. This resulted mainly from the increase of PADICO HOLDING’s share in associates results of operation with an amount of USD 41.98 million in 2013, considering the profits gained from the associates during the period, in addition to the effect of the change in fair value of the financial assets which was classified in OCI, related to associate companies’ investments.

Table (3): Summary of assets distribution

Item 2013 % 2012 % Change %

Cash and financial investments 68.27 8.4 70.66 9.1 (3.4)

Investment properties 98.08 12.1 100.87 13.0 (2.8)

Investments in associates 378.28 46.8 358.44 46.3 5.5

PPE, and projects in progress 191.66 23.7 169.84 22.0 12.8

Receivables, inventory, and other assets 72.38 9.0 73.94 9.6 (2.1)

Total assets 808.67 100.0 773.75 100.0 4.5



3.2 Liabilities

Total liabilities increased by 3.7% from USD 277.93 million by the end of 2012 to USD 288.11 million by the end of 2013 with an amount of USD 10.18 million.

Total debt, which comprises bonds, bank loans and credit facilities, constituted 78% of total liabilities, and reached USD 226.12 million by the end of 2013 compared to USD 225.29 million by the end of 2012 recording a slight increase of USD 0.83 million with a rate of 0.4%, these debts include the bonds that was issued by PADICO HOLDING in 2011 with a nominal value of USD 85 million.

Other liabilities constitute 22% of total liabilities, and include trade payables that related to subsidiaries` operations, dividend payables, provisions and other liabilities.

52٪

35٪

13٪

3.3 Equity

Equity attributable to equity holders of the parent company increased by USD 20.36 million from USD 398.49 million by the end of 2012 to USD 418.85 million by the end of 2013, recording an increase by 5.1%. This is due to the increase in comprehensive income (attributable to equity holders of the parent company) for the current period which amounted to USD 33.66 million after deducting dividends distribution of the year 2012 which amounted to USD 12.48 million.

Equity attributable to equity holders of the parent company consists of USD 250 million of paid-in capital, in addition to retained earnings and reserves amounting to USD 149.69 million by the end of 2013 which constitute 59.9% of paid-in capital. Accordingly, the book value per share reached USD 1.68 by the end of 2013. Non-controlling interests (the interest of other shareholders in the subsidi-aries) reached USD 101.72 million by the end of 2013, constituting 19.5% of total equity which reached USD 520.57 million by the end of 2013. Non-controlling interest recorded an increase of USD 4.39 million from USD 97.33 million in 2012 to USD 101.72 million in 2013, this increase resulted from rising the paid contributions from partners on the working capital of the new projects and investments such as Nakheel Palestine, Jericho Gate, and JAIP.

Equity attributable to equity holders of the parent

Liabilities

Non controlling interest


Table (4): Summary of total equity

Item 2013 % 2012 % Change %

Paid in capital 250.00 48.0 250.00 50.4 -

Share premium & treasury stock 16.39 3.1 16.25 3.3 0.9

Retained earnings & reserves 149.69 28.9 130.62 26.4 14.6

Foreign currency translation 2.77 0.5 1.62 0.3 71.0

Equity attributable to equity holders of the parent 418.85 80.5 398.49 80.4 5.1

Non-controlling interests 101.72 19.5 97.33 19.6 4.5

Total equity 520.57 100.0 495.82 100.0 5.0

4- PADICO HOLDING’s stock performance in 2013

PADICO HOLDING’s stock increased from USD 0.90 at the beginning of 2013 to USD 1.35 at the end of 2013, record-ing an increase of 50% with an outstanding number of trading sessions.



Facts about PADICO’s stock in 2013:

Item Value

Market Value of Shares USD 337.5 million, representing 10.39% of the whole market value

Turn Over Ratio 35.11%

Trading Volume 87.76 million shares, representing 43.24% of the whole shares traded

Trading Value USD 100 million, representing 29.47% of the whole shares value

Deals 8,521 deal, representing 19% of the whole deals in 2013


AUDIT REPORT AND CONSOLIDATED FINANCIAL STATEMENTS


PALESTINE DEVELOPMENT AND INVESTMENT LTD. (PADICO HOLDING)

Consolidated Financial Statements as at December 31,2013
























































Palestine Development and Investment Ltd. (PADICO …Liberian Business Law of 1976 Annual Report 2013 . 2 2013 ... Yazid A. Mufti Board Member representing Cairo Amman Bank Samir O.

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